[NEW YORK] OpenAI is close to finalising a US$40 billion funding round led by SoftBank Group – with investors including Magnetar Capital, Coatue Management, Founders Fund and Altimetre Capital Management in talks to participate, according to people familiar with the matter.
Magnetar Capital – an Evanston, Illinois-based hedge fund – could contribute up to US$1 billion, according to multiple people, all of whom asked not to be identified because the information is private.
The artificial intelligence developer’s funding round would be the largest of all time, according to data compiled by research firm PitchBook. The deal is set to value the company at US$300 billion including US dollars raised – almost double the ChatGPT maker’s previous valuation of US$157 billion from when it raised money in October.
As part of the deal, SoftBank will invest an initial US$7.5 billion in the company, along with US$2.5 billion from an investor syndicate, said one of the people familiar with the discussions. There will be a second tranche of US$30 billion later this year that will include US$22.5 billion from SoftBank, and US$7.5 billion from a syndicate, this person said.
Its shares slid as much as 4.7 per cent in Tokyo. The company’s credit default swaps widened, in part because of concerns about the impact of such a large outlay on its finances.
SoftBank declined to comment. The Japanese conglomerate has separately committed billions to the Stargate Project, the Abilene, Texas-based joint venture with partners including OpenAI, Oracle Corp. and MGX.
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Representatives for OpenAI, Magnetar and Founders Fund declined to comment on the funding round. Coatue and Altimetre did not respond to requests for comment.
The funding round underscores investors’ enthusiasm for a company that’s growing at an extraordinary pace alongside the adoption of AI around the world.
OpenAI expects to more than triple its revenue this year to US$12.7 billion, fuelled by the strength of its paid artificial intelligence software, Bloomberg News reported earlier.
The San Francisco-based company generated US$3.7 billion in revenue last year, according to a person familiar with the matter. OpenAI expects sales to continue growing at a fast clip, more than doubling next year to US$29.4 billion, the person said on condition of anonymity to discuss internal communications.
Still, OpenAI is also confronting significant costs from the chips, data centres and talent needed to develop cutting-edge AI. It doesn’t expect to be cash-flow positive until 2029, the person said, a year when it projects revenue will top US$125 billion. BLOOMBERG
